Pharma should actively embrace this blurring as it likely creates a landscape which is much more favorable to its patient-centric and commercialization goals than the current state or many potential alternatives. This coming together may afford pharma a chance to reset many of its frayed relationships as the concentration of financial risk drives a more integrated focus on improving clinical outcomes, thereby increasing the value of its novel treatments.

These new entities recognize the essential role technology and data play in achieving improved clinical and financial outcomes, and pharma must match, or even surpass, this technological-centricity in order to succeed. Unfortunately for much of pharma, the speed of technological innovation outpaces the industry’s ability to stay ahead of the curve. Yet it is precisely pharma’s ability to leverage advanced analytics to optimize resource deployment, create engaging experiences on new mobile platforms as part of health economics and outcomes research (HEOR) studies, or tap into social media to identify and overcome adherence barriers which will power successful relationships with these new entities.

Manufacturers who embrace these techniques have the best chance at success while those who do not will risk the type of irrelevancy that today’s slowest-to-adopt companies now find themselves trying to reverse.

Rod Cavin

The recent phenomena of “hyper-verticalization” creates a number of challenges to pharmaceutical firms including: Purchasing power aggregation; expanding control of providers, distribution, and patients; and lastly the opportunity to create market disrupters as these new entities seek innovative solutions to complex problems (think Amazon). Three emerging issues that pharma needs to prepare to address are:

When payers and providers merge, access and marketing plans need to align across these stakeholders to ensure success. So, quickly move beyond product messaging to address the clinical, financial, and operating objectives of these new customers.

The current price-benefit and access dialogue must move to embrace larger issues that these new customers face as they work across diverse populations and attempt to manage quality, cost, and outcomes. Understanding how products and services fit into the larger equation of healthcare delivery and sharing in the creation of new approaches is critical to continue to be part of the solutions.

Identify the innovators in the corner who are driving the change. Few of these larger firms are likely to be the innovators. It will be the small startups they fund or those who step away and think out-of-the box. Identifying and engaging with these innovators is required to build the skills for future success.

Asif Velani

Today’s mega-mergers have a number of implications for pharma. First, to generate near-term value from the deals, the newly combined organization will synchronize pharma rebates starting with the best terms across both organizations. Following that, pharma can expect four more broad implications:

Higher stakes with every contract, given the increased concentration and market presence.

Greater complexity in payers’ structure reduces transparency in lines of business and creates more difficulty in understanding incentives and decision-making.

Changes in front-line relationships between pharma and payers.

More sophisticated payers will exercise more influence on provider decision-making, innovate payment models, and employ more tools to handle benefit/cost trade-offs between therapies.

Due to these implications, pharma must:

Understand the impact of mergers on pharma economics.

Evolve contracting abilities to be more detailed and customer specific.

Invest in capabilities needed to participate in new payment models.

Position account management to address the needs of larger, more complex customers.

Help providers and patients navigate the reimbursement complexities.

Revisit R&D priorities to ensure they are relevant in the new access environment.

Chris DeProfio

The impact on reimbursement models is relatively unknown because the shift to value-based payments is still evolving. A lot of subjective measurements and regional disparities also must be considered that can impact outcomes and quality data. And with constantly changing healthcare policies driven by the government, there’s naturally going to be a delay in the full adoption of value-based medicine.

Pharma should be considering collaborative partnerships with hospitals and health systems to come up with solutions that are beneficial to both parties. While these types of partnerships may be complicated, the benefits will outweigh the effort. Agreements focusing on proper medication management and adherence have been gaining steam and will ultimately lead to better patient data and outcomes. This also creates a reimbursement environment that aligns payment for prescription drugs more closely with health outcomes.

Pharma can help ensure these programs are successful by reporting on long term-data and creating models that can be universally applied across health systems. Only transparency of current partnerships and sharing of success stories will help advance pharma’s place in the future of value-based medicine.

Doron Felman

The rising cost of healthcare is forcing payers to utilize reimbursement models with HCPs that are designed to enhance the quality—and reduce the cost—of care. These various models fall into two categories: Outcomes (in which reimbursement is tied to achieving key metrics) and cost of care (in which reimbursement is tied to a physician’s ability to treat a patient at a capped cost).

Within emerging models, pharma companies have two core responsibilities: To develop and market drugs that provide both clinical and financial value to these reimbursement models, and to support HCPs in achieving their desired outcome. Some ways to help support pharma companies navigating these models include:

Conduct an assessment of how pathway developers are evaluating and preferring specific drugs to inform the strategic and tactical engagement approach.

Communicate a brand-value proposition that supports prescribers in achieving the outcomes critical to their reimbursement.

Provide HCPs with the education and tools they need to enhance the quality of care they provide and meet their key outcome requirements.

Diana Verrilli

While some payers and providers are collaborating to create value-based reimbursement arrangements, these agreements are not materializing at the pace one might think. Oncology, in particular, is complicated due to the sensitivity or perception of tightly managing service utilization, drug inflation, the ability to reliably estimate trend factors in reconciliation models, the complexity of including drugs in bundled payments, and a payer’s ability to narrow its networks of oncology providers to address higher cost/lower quality settings of care.

Further, payers often lack deep understanding of cost drivers and care delivery challenges. A goal of a value-based care payment model is to impact the total cost of care and thus, since drug spending can represent almost 50% of the overall cancer spend, it’s imperative that costs, appropriate utilization, and outcomes be addressed. Still, pharma companies should further evaluate the types of risk thresholds that they can most effectively manage to promote outcome-based reimbursement.

As the lines between provider, payer, and PBMs are blurring, this presents an opportunity for pharma to collaborate with payers for reimbursement-based outcomes with the patient in mind. Collaboration on provider education, patient outreach, medication adherence programs, and wellness initiatives can then be jointly developed with the goal of ultimately benefitting the patient.

Daniel Sontupe

The easy answer: Lower prices! However, we can all agree that simply lowering prices is not realistic. The new environment of higher copays and pharma-issued copay rebate cards is not working. Patients do not like using copay cards and pharmacists do not like taking them. Payers are penalizing patients for using them and are not including their value in a deductible. What is the solution?

In today’s environment, payers and pharma need to work together to create population health programs. And because we can appreciate the medical/clinical value that products bring beyond pharmacy cost, it’s time to make the payer the hero when it comes to patient copays.

Pharma needs to partner with the payer to provide a value-based insurance option and add the value of a copay card to rebate contracts—in exchange for lowering the copay burden on a branded product. Essentially, underwrite the insurer to allow patients to receive a brand copay equal to the generic tier, which should drive an increase in brand utilization. Who wins? The patient (because access is no longer a barrier); the payer (they drive better outcomes and higher rebates); and the pharma company (market share increases with the additional costs already planned for as copay card redemptions).

Julie Pilon

With nearly 1 in 10 Americans not taking their medication as prescribed due to affordability, much can be done to help. Pharma should expand their thinking from providing Patient Assistance Programs (PAPs) in isolation to having PAPs as part of an intelligent service ecosystem where the right interventions could be delivered at the patient moments of needs. Four ways pharma can help are:

Leverage the trifecta of service design, data science, and technology to connect patients on your PAPs to a greater ecosystem of services they could also benefit from.

Be predictive as to when patients require most help with affordability. The use of data and AI machine learning can help predict by therapeutic area when patients are most likely to lapse in filling their scripts.

Be expansive in thinking of other services you could provide or direct patients to. Think of “pharmacies shop around,” which could help patients in their geolocation identify which pharmacies offer the best price.

Be there for the patients—the burden of affordability is a hard one to bear. Chatbot assistance could go a long way guiding patients to next steps, so delays to treatment access can be minimized.

Corey Ford

Offering robust patient-support programs is a critical solution for facilitating greater patient access. As the health policy and broader landscapes continue to shift, programs should be nimble and continually assess if they have the resources in place to support their patient populations.

Given some of the recent legislative and regulatory changes to the ACA, patients in the individual market may face challenges in accessing insurance options. As such, patient assistance via free drug programs may be a solution to assist both uninsured and even underinsured patients.

Even for commercially insured patients, high cost-sharing requirements may present affordability challenges, and manufacturer-sponsored copay assistance programs can help minimize the financial burden for patients. However, emerging payer models to restrict or limit copay assistance (e.g., Accumulator) are gaining traction within the commercial sector.

Manufacturers must think through several considerations when developing a patient support program, especially with the amount of medical innovation occurring today. A model that may drive success is the case management model, one that offers a dedicated point of contact assigned to each patient who is geographically aligned with field reimbursement and sales/educators and has the necessary expertise in regional provider and payer management.

Debbie Toscano

Building a great value proposition is an art as well as a science. A strong foundation, coupled with concise yet powerful messaging, can turn a hard-core skeptic into a firm believer.

In 2018’s competitive market, positive clinical data is not enough. Real-world evidence (RWE) and HEOR data add tremendous value to the data generated in the controlled environment of a clinical trial. Fortunately, the amendment of FDAMA 114 has “unmuddied” the waters a bit, giving pharma manufacturers more opportunity to communicate pharmacoeconomic data.

Although we are planning for big changes—when value props will reflect “skin in the game” between pharma, health plans, health systems, and beyond—in 2018, that’s still pretty nascent. The conceptual idea just hasn’t yet materialized into processes and best practices that can easily initiate, manage, and measure such initiatives. But, we know it’s coming.

So, for now, we look for value anywhere from filling a treatment gap with a novel molecule to providing support services that bring that extra something to improve adherence. We’ll typically craft customized messages that resonate with unique stakeholders. For instance, does your customer even believe that there is a treatment gap? If not, your value prop will need to start with persuasive data and a meaningful hook all wrapped up in a shiny, very compelling narrative.

Clint Burrus

The integration of pharmacy and medical benefits into a more consolidated cost impact is quite likely, although the full impact and timing of benefit design change remains to be seen. Until the U.S. healthcare system is fully integrated, it will continue to require multi-faceted approaches.

One area in which pharma has made large investments is HEOR and budget-impact models. This approach, although valuable for novel and specialty products areas, has been met with skepticism, particularly with less novel or 505B2 products. Examples of skeptical payer responses include:

“no one shows a model that is not favorable to their product”

“patients are generally only in our system for two to three years and timelines for the drug value are much longer”

“our exposure is only on the pharmacy costs”

Pharma frustration is enhanced by these responses in some cases because companies believe HEOR or budget impact are critical in showing total cost value. Rather than look at this work as an end point, pharma must see this as one tool in a larger series of support material in which strategies are developed that combine HEOR, WAC price, discounts/rebates, patient copay assistance, and HCP prescribing demand to achieve broader access.

Ilene Auerbach

The value proposition of a therapy has shifted from focusing primarily on cost or pricing to truly embracing the overall value of a drug. Historically, that “value” story was a singular message—a “one size fits all” approach—though it has since evolved into a targeted value proposition that will resonate with the audience to whom it is being delivered. This often means that a product may have several different value propositions, customized for the needs of each decision maker. Defining that value proposition entails mining insights from each stakeholder and creating a customized and comprehensive picture of the overall value that fits the needs of each audience.

With increasing competition and a need for products to establish their differentiation in the marketplace, RWE and HEOR provide evidence about the product’s performance in the real world to substantiate the product’s supplemental value beyond clinical trial data and product attributes. Rather than waiting to see how a drug behaves in the real world, decision makers seek out this evidence earlier in the lifecycle, with a shift toward pursuit of RWE and HEOR data alongside clinical trials. Outcomes data may help to overcome the barriers of implied or assumed benefits, especially for new-to-market products.

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